GSBC - Earnings call transcript Q2 2022 | Great Southern Bancorp, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Great Southern Bancorp, Inc.

Second Quarter 2022 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Kelly Polonus with Investor Relations. ahead. go Please

Kelly Polonus

Good call Carmen. for welcome. purpose The quarter Thank is afternoon, to this XXXX. today June results discuss of ending you, XX, and the the company's

you date we quarter statements, only that Rex XXXX make Before which statements events not speak Please statements future President they as with forward-looking use on turn second over financial Joe now about need more Turner; in on place Please I the the I'll to undue release disclosure forward-looking information. to earnings during call, our Turner. and reliance are and we begin, our for Chief Copeland, made. call this Joe may CEO, performance. today. call do the and Financial of remind any me Officer, are forward-looking

Joe Turner

and call. the And release for Hopefully, have, Kelly, very seen review chance that's of Thanks, us We from you've if second to certainly quarter good good you've quarter a afternoon we everybody 'XX. today last the you that the night. earnings came call. momentum out continuing joining a first our to on quarter, had you Okay. had which appreciate our

rate opportunities Our the wake on of I our country's industry. properly especially in economic ensuring is environment. positioned, interest and landscape We're that all changing participants challenges both the current for and focused we're us, provides guess in our changing company --

company. associates remain their with proud a to we I'm and steadfast to long-term core customers with of to customers world-class our and commitment always, As operating our adhering appreciate team our our of of while our tenets in service providing mindset.

of the Then quarter and $X.XX 'XX. to the remarks in million of company's open performance call who in in results. we growth I expense. in it for up get compared earned financial there period of for details swing There difference per the a what no because per Really, own or $X.XX quarter was we it share about in some expense million, about of As loan had second the or second will 'XX, we'll net usual, million In think, $XX.X In then provide our more that the commitments. $X.X was for same questions. related was provision brief $XX.X provision million into share quarter. over 'XX, quarter $X.X expense provision side big I'll our the exclusively was we Rex, the the have our turn obviously recoveries for almost charge-offs to

for XX.XX. quarter of with performance earnings the the on ratios Our for were equity return assets and of strong return also X.XX on

had was Our margin XX at had collected additional security we off We from X.XX. that with margin -- points income one our I we X.XX. some think extra paid us, We nonperforming of interest well. that flowing as interest basis we to core then had about charge-off put think and loans

first quarter, second in as the brisk quarter. the was loan During was it production

beginning of four-family, net in in $XXX saw think year. million well. and multifamily the in estate the real quarter $XXX million total second Our one-to increased about from We I grew commercial in increases as the loans and

increased the quarter. loan during also of pipeline Our commitments

from office did open the in during We newest $XXX everywhere. North $XXX strong and I veterans, staffed opening with Carolina our those loan think about XXXX, production industry Charlotte, offices earlier of locations. follows and both quarter are the that about production in the -- million the those opened our prospects office new excited both and so production quarter maybe million of we're loan And year. in Phoenix in of of our the end loan

Asset levels. good historically to quality continued be at

end the for year. decrease a first million point were the we $X.X period-end the million of basis assets a of at recovery quarter, was end from and one basis which Nonperforming X had the assets were the of points, nonperforming of half about assets, the year. Our $X.X the

equity of capital to XX% stockholders' of and total total common just Our XX. stockholders' I of at strong million, XX.XX. value had that assets. total under book book book. equity guess Total per continues were $XXX.X be of as a And is June we share book That's value value tangible XX.XX.

our our decrease active $XX rest of AOCI in did half first our was swaps as result million $XX.X of securities. program. swing came About during related fairly equity by the that million. repurchase stockholders' a of year to of that the The Our in a

in million back. $XX year increase our a the XX% spent dividend, an $X.XX from representing our declared company buying of share second per we've share quarter, think the our first stock dividend. $X.XX half I the In common

I also, to continue in stock We as long-term repurchase value. mentioned, an to shareholder effort enhance

our concludes CFO, with call a XXX,XXX We region to shares authorization. the recreational, arena. $XX.XX have Missouri which levels turn of changing million opportunities. left its economic the manage 'XX. educational, price our -- second Rex shares common operating remarks. current In this at long-standing of the now economic about also during were had in to we This and At $X.X capital of with university, agreement Great called at That to We'll judiciously pleased over light University rights provides the I'll the agreement repurchase we prepared half announce athletic our time. Copeland, Southern with State repurchased we the stock and continue my average an of the for relationship June circumstances. further indoor significant XX, naming Southwest arena Bank XXX,XXX cultural first Missouri in deepens our of quarter,

Rex Copeland

changing there assets. also, our and of of about XXXX. of $X.X Thank in margin $XX.X All quarter second margin Part The was bit. XXXX. second Net positively interest were was loan interest sort X.XX%, was we a higher of around for some and X.XX%, compares expansion changes I'll the million to and excluding quarter to income quarter that first charged-off interest recoveries interest that million it moving also of for interest that The of We related compared going was margin, income year affected to increased rates the with first been talking by quarter million to the an a both compares cash the $XXX had. second to ago. the quarter to interest you, was earlier, in that income Obviously, and extra the mix million little recoveries we net our the three that the of piece said one net larger of our during year had that this bit has quarter in Joe start off equivalents flattish, a like average securities those loans million and about the previously quarter. of year think had, also X.XX% Joe. about second the the $XX.X Average the XXXX. as $XX.X decreasing right. mentioned, compared in XXXX a mix average We're investment on items margin previous kind $XX were million for the quarter income, from million. interest asset us. were Joe we same X.XX% Net $XXX about which with of range for security decreasing quarter, increased

of when in also interest XXXX. million reduced of expense redeemed our $XX We we August subordinated notes

the rates, raising as in previously, rates we've We'll bit, Feds term. rising net deposit particularly in would interest anticipate lag see we'll gone increases income rates further further our floating probably some Fed rate case very with impact a up. market has and there pretty interest rates should upward to market have rate indicated in short-term the but rate see environment, increases Short-term start have our up our will be rates loans rapidly. deposit We in rates rates. increases increases positively as generally the as stated the We gone well. As that reprice this as our may been anticipate the near

this those also were I'm of as utilized. Federal The our shifting a mix. the We we -- far outstanding period previously had loans Loan situation rate asset that changes have Bank so as just had at sorry, have a and similar and this about had Federal much Home had are about we We decreases rate funds $XXX,XXX sales. as market over the Reserve Bank we kind in in originating six-month to by year of those. on originating cash shorter are the cash that. increased rate the in million compared increased secondary the fixed Noninterest is in of quarter originated profit retained income year more What those $XXX much Obviously, total sold lot $XXX from period Last and decreased rate then of year, million of sold sheet. our year million. on this adjustable that loan balance ago $X beginning decreased million we're a to $XXX Investments being our while quarter this the about fixed loans second become a less far year and loans, million. $X.X We year. we equivalents the originated longer-term year,

have income in the customers, not on that $XXX,XXX year in in last $XXX,XXX in a activity ago. on same as profit of Also, our level we had year products, we sales swaps have rate with derivative back-to-back had on So loan the we the change second quarter loss that versus loan period quarter recognizing recognized of the value we our second fair this the year. interest

income somewhat. Also by assets. other have gains offsetting rates to $X increased to of Non-interest prior expense. million market in other about related the we some changes year that -- So of compared that sales impacted some recognize as fixed some

cases, quarter that that last the in of increased the out the operational that and a cash this contributing in the various special response increase The of in was increases were increase comparing to bit $X.X the all little and we the most the paid been was economic and merit have employees, for some second prices environment and than services non-interest portion on our $XX.X to to had totaling $X.X year in as a employee for Also increases and was versus maybe million factor many larger normal to portion in ended and and year. salary about total been of last significant now. expense the going quarter a So to in benefits, million significant years. bonus rapid that XXXX maybe annual in to compared increase largest lending the June right million, couple related from XX, increases the they $X.X areas, previous million goods

said, and got as Phoenix -- Joe we've we've related expenses loan opened offices production new we've addition, the Charlotte, there. so additional and in In some

deferred PPP Lastly, year, loans costs origination that this related last originated we last we mainly some category year. to in the

also we'll on more that mention deferral efficiency I the fees. really to upcoming non-interest about costs to you second year and quarter professional quarter. the obviously, ratio $XXX,XXX later. systems that We little the software some quarter professional provision this is from period. of for and those loans to and losses about a this and related $X.X amortize but in second -- rate Also, and engaged little of legal mentioned to defer the In new quarter expenses this the were some loans $XXX,XXX and expense related year -- have, had related GAAP higher this So about of for the the we efficiency transition fees of so professional platform. ratio training compared there talked fees. This prior didn't that conversion then to work current bit loans, XX.XX% a total The through for XX.XX% core of XXXX under some accounting, that we've as costs the million here. the increased we credit origination Joe those this items earlier. PPP legal, a bit primarily implementation those less XXXX, for so much was to we period, not totaling previously the They consultants have was number

had and to we a This had the negative commitment unfunded entirely that year loan quarter expense that the $X.X So we of provision million. second year second provision last in related we million $X said, balances we second quarter, the the also XXXX in of have And net in first time. of $XXX,XXX recoveries in Joe, recovery was year. this about the at net had that think it I quarter, period. half

taxes. income mention I'll Lastly,

was comparable rate. but this rate XX.X% the and quarter also, fairly months I second XX.X% for tax six effective Our in the with year, about believe,

that run the I think in XXXX. credits. pretax jurisdictions And are the rate XX.X%, by obviously interest utilization well XX.X% anticipate the second that in future to higher, periods, tax income. bit as of to tax and we state was total tax-exempt on investments that We our but just is going taxing mix of then and quarter loans have levels between rate we of that affected also range in that also as various involved we little by the a our further have is the in XX.X% the

prepared So that can this time, concludes remarks entertain At we questions. our today.

once me the for Q&A let our a attendees have remind So ask on that again operator to questions. call the

Operator

[Operator with Instructions] Liesch Andrew Piper We have Sandler. a question from

Your line is open.

Andrew Liesch

everyone. quarters front? it you I talk now that growth What production want the slowed seeing the of we're here. on side payoff Has Hi, couple these just the trends. about Or Obviously, in to contributing that's are a Thanks. to on growth? numbers? payoff seeing really good and is the really just loan

Joe Turner

have think slowed, Andrew. I payoffs definitely No,

pretty refinancing maybe got some as attractive, quickly they're while occupancy, the multifamily And permanent aren't that's hard electing of it's were our those market. permanent a of off loans to they into now and after those their paying little maintain to so think I say what rates with construction longer. to developers We balances us the certificate totally. attributable for just think

yes, think brisk the So well. I of quarter during as was certainly a that's the although story, definitely production piece

Andrew Liesch

think quarter. that in three concerns, third keep Has production trended rates the I investors just few given last pullback hearing from weeks? weeks some far rising so to a into continued macro is about a were and how but the that production

Joe Turner

I -- bit. is don't It to don't really get that. ebb-and-flow going little a I

going to point, off about that a pretty be I is that three gosh, me short significantly yes, it's it in prior I guess anything of I it's So at say, wouldn't week different period of even be been terms don't period. to than think it's believe time. lead just it quarters, but or two could in would this there's a quarter as

Andrew Liesch

plateau how loan the any you. securities came reached should flows fund size the that couple Has Got cash use on in Rex, all the over to and securities we growth? How the portfolio a of years? you should think here? liquidity outflows of from use it it last the And we portfolio? about

Rex Copeland

Yes.

not some think change is don't probably, it, to that portfolio I that our I going is we'll anticipate a don't grow, repayment think going level either. our to securities going lot. on and I to but Certainly, whole be it's extreme have repayment

So lot portfolio probably I at around to not a whole going think this point. be our is roughly moving

Andrew Liesch

expansion expansion And But good margin. some and right. that then get question like pace from funding Got rates a you'll on hike pressure going given -- some sounds another to it. All costs? and the on rising say benefit still some just it slow of Obviously, rate here, just is but upward presumably week. next the

Rex Copeland

June I have end say, I those yes. to the of deposit somewhat, lag cost able we increases. been would mean of through some

mix. of Some be is bit change of it to in funding a the going little

year trend deposits that And So we supplement the some maybe will deposits with with a in a loan total and replace were peak of or ago bank fluctuate a of down at where may that maybe advances. maybe may also bit level, home -- some could but be broker and similar little from the some balances we non-time so.

than at those bit, than market so that they the current to going portfolio. And also here. is I'm down are paying lower have a our lot as trending are but just whole rates balance more And our going that may rate non-maturity out the far to flatten not going those little sure retail be a on certainly, go start start. goes, they're to been to CDs probably as then we're rates on deposit

balances Fed the raised rate already be the there higher than going and XXX points just bring XX. is existing on probably another the CDs, or portfolio in review we because basis rate As to retail new that

Joe Turner

for a week, was and us that basis think earlier is rates right guy kind rig this rate I track new of CD our the meeting that us around average portfolio balance XX told the that now points. X% our

you into It those mentioned to countervailing there's increase So There's further to -- what is of about just be Andrew, in beta CD into that's interest to year, rate see the of tend drilling, rate the increases, the right. going cycle tend higher. of you interesting. further factors you're get certainly beta sort get increase force interest generally a Rex factors a

adjustable much didn't we The portfolio, money billion, least our all those adjust -- loan adjust that did the not is, the pretty on in about were that. at daily floors. so money or we on, lot other floors adjust early something -- which though, loan out of and pretty $X.X Well, fully. now didn't monthly in rate that on was thing with much We're we're adjusted have of portfolio like or we portfolio. A

the -- increase. that portfolio whatever they So almost increases, will all most when Fed week, do that's next of

a going said, The So of billion think increases $X.X positive as non-maturity so to deposits got those or expecting we that Rex is, that's for I us. rate. negative are customers start

Andrew Liesch

Makes questions. sense. taking for I'll the Thanks step all back.

Operator

We Instructions] Please a go ahead. have DelMonte KBW. question with Damon from [Operator

Damon DelMonte

well Hi, are you today. good guys. Hope doing afternoon, guys

first just the positive loan guys outlook. up So pretty sounds growth. your remain of on kind you question, follow on back like It

Just around you you How And expect that are the the kind loan-to-deposit wondering, this half? pace is in level? of about to as get also that back thinking down of to do you XXX% kind quarter. close here XX% the ratio slow

Joe Turner

the bit. the another growth $XXX don't in We to -- I will expect of a the Yes. I loan second mean selling year, I would grow million, market want want a the do of the little million of growth or down see as year. mean, probably we $XXX to either slow in half result loan think second we slow down half out to

growth down six it where of I from the think months certainly been it's in think first be would the I year. So be loan would --

Damon DelMonte

it. Got

came LPO of the late kind things, the on in of the latest expense Okay. And just quarter. online side then

You when at this system expenses we nonrecurring a I this level quarter like back project have some expect you of can of took million bit underway you conversion of out a items? of here. $XX.X off of kind puts of the Rex, So nonrecurring kind quarter's out lift $X.X the million.

is it that headwind? those So maybe given assume other expense $XX to kind fair million up go just to of level you're going towards

Rex Copeland

Yes.

maybe quarter So quarter probably year. mentioned had $XXX,XXX there third $X the we to of in next we million-ish the systems items. the to think a this some -- related That's conversion that get that to be related the quarter I until we going

costs an to implementation you some with the got include that like perspective, are folks related We've us, -- some third-party there's training that consulting to also, and So said, the have -- costs that too. working from accounting those now. are I

And a type expense retainer so monthly there's there.

think little for I be $XXX,XXX, next million so. probably million, or a that the whether we'll the than each be higher expense like So $X.X quarters more looking quarter $X at probably four that

Joe Turner

have not another we the that next for probably So the special would be $XXX,XXX-plus bonus $XXX,XXX for million whatever the recurring $X.X quarters. the Damon, that that or recurring would few be

Damon DelMonte

Got it.

that take account. into right, All Okay.

just very the And I capital half year. in on guess lastly of Obviously, first then active Okay. the management.

very still strong this capitalize. a half year? continuing of You position back through in thoughts the remain What the buyback are your on

Joe Turner

still I think selectively agree where capital, our continue stock. back -- I though. you, it we're our was, it's to buy It's going to It's not strong. with

And very seriously. buy year, half during that will doubt the XXX,XXX so the we of I shares second

in market. second the modest modest -- I more of still we're buyback certainly part be in will year, the think the but our

Damon DelMonte

That's I had. you it. much. Okay. all very Thank Got

Operator

Please Instructions] with have [Operator Janney. ahead. question from John We a Rodis go

John Rodis

afternoon, are doing good guys well. guys. Hope you Hi,

the question just I Rex, back on to -- Just maybe expenses. guess,

you if recognized conversion So pretty then Maybe take some fully stuff, this, and of quarter? the the LPOs the $X Or additional out those we add that? much but to into bonus. new account full you expense the back I second and in are missed do if have you cost million onetime said for

Rex Copeland

much the on the second just of on additional but part first LPO [technical that those would fully on difficulty] high included that The in in quarter, quarter, of pretty be to Charlotte little basis. a the because is Phoenix bit latter not in quarter the There we expense put related came expenses overly quarterly there. are it

John Rodis

Okay.

-- north that $X little $XX So million to that expenses million it be year, Is you're quarter, cost looks like going bit correct? around of at with least. a next again, conversion for so the a

Rex Copeland

Probably.

John Rodis

Okay.

Rex Copeland

other fairly about That's how probably I thinking it, quarter think, would I I was during stuff, should you be the the normalized. think. mean

million that little just more extra got -- conversion-related had a we stuff, the bit you have So won't assume for add we $X.X we've but to the for that that

John Rodis

Okay.

the reason margin margin you why just at think, I -- X.XX? X.XX, back go curious, the back How Rex, the should XXXX, go back that level, should X.XX. rates? to Structurally, closer And if margin, X.XX%. core you higher yes, I'm increasing you Or items. if that Fed On yield we is the onetime there look go was that core level the accretion to if should out if you shouldn't margin, back cycle a it prior raise 'XX, you than the even think rate continues about go said about that? to to was X.XX, it or exclude

Rex Copeland

quarter, I to, Probably a type that But raising 'XX, some we quarter similar. the XXXX And X.XX, early again. I've the rates was third rate think, at here you 'XX, I Fed directionally, toward of course, would first margin think the into of we going our would 'XX. XXXX, dropping X.XX directionally, kind quarter would 'XX peaked where more and rate. -- first range. mean then information 'XX, increasing quarter, our I John. margin then of anticipate during me dropped in kind mean the a X.XX we're get and of be end tell the some I cut lot. don't down some can't And then, X.XX exactly to started the be second around range And of later as X.XX, end our back margin cut of Fed we of started little X.XX, I front core could of in got in at

Joe Turner

the and that higher or Would be than back now quarter out like of QX our lower at was proportionately pointed securities it 'XX. John level cash

Rex Copeland

less We believe I would generally had securities, Probably, then similar. have --

Joe Turner

That's equal. all other things being

Rex Copeland

cash have or we anything. any extra But wouldn't had

Joe Turner

you have if it little had securities, back would So say, then would loans. mix equal, margin than all more higher things the other be being a fewer you Yes, right. higher

thing there ask, you that thing would would maybe is point the mix as at So might anything say, look would only when this that, dissimilar structurally only John, to that's now. the I that being you to be asset

John Rodis

Okay. Yes, makes Joe. that sense,

other question, guess one even million. linked I Joe. Rex $X.X Just or that quarter to million increase? goodwill drove increased like $XX.X from What

Rex Copeland

the the was for rights naming arena at That university. the

John Rodis

good reason. That’s Okay. a

So that's pretty nice.

you. Thank guys. Okay,

Joe Turner

Thanks John.

Operator

Thank Q&A you. for our night. Thank disconnect. may a you and program and And concludes today. this wonderful Have for you all participating,

Great Southern Bancorp (GSBC) 21 Jul 222022 Q2 Earnings call transcript